About this episode
Simplified Explanation: How easy is it to stay out of debt? That depends on you. Will you borrow from another credit card, after you just paid it off? Statistics show that the more effort someone puts into something they really want, the more likely it will be permanent. If your parents paid off your debt, you would be right back into debt within months, or years. If you did the work, and felt the pain that came from it, then you will appreciate it more.
Real Life: There is an old saying: “Cash is King” well what about debt? Previously, I mentioned how debt is bondage. Another saying is that “you become a slave to the lender.” This is not just hyperbole; this is completely true. When you live your life with high debt, it controls you. It keeps you working for it, until you rise up and say, “no more,” and start taking back control of your life, by getting rid of it. Debt is one of the greatest burdens and sources of stress that will ever enter your life. Some would say, even more than medical issues. More people die from financial stress (including medical issues caused by stress, starvation, and suicide) than any other single source of death. It is like a ball and chain around your leg, and should be seen for what it is.
BUT, you have a way out. You are learning about it early on, so you can avoid the pitfalls caused by this burden. Here are some of the most “acceptable” debts in life, that most people undertake because of necessity. These debts are College, Home, and Transportation.
NEW DEBT (COLLEGE YEARS) (W4:D4)
College – The greatest way out of financial strife is education. Statistically, you will make more during your life by going to college or trade school, because you will be able to get a better job (though, is it worth how much you pay to go to college?). Here are the statistics for how much you’ll earn, compared to the cost of college.
Level of Education
Average Annual Income
Difference in pay over 20 years
Public College Debt
(on campus)
Private College
Debt
(on campus)
Less than HS diploma
$25,636
-
$0
(Minimum) HS diploma
$35,256
$0
$0
Some College
$38,376
$62,400 ($3,120)
$16,000
$34,000
Associate’s Degree
$41,496
$124,800 ($6,240)
$32,074
$69,112
Bachelor’s Degree
$59,124
$477,360 ($23,868)
$103,456
$215,796
Master’s Degree
$69,732
$689,520 ($34,476)
$288,000
$369,600
Professional Degree
$89,960
$1,094,080 ($54,704)
$435,200
$652,800
The big question is, is your higher degree worth the amount of money you will have to spend (tuition, living expenses, and interest on your loan)? Let’s look at the final part of that equation.
Cost of college after interest (over 20 years) - If you put all th
